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Updated March 20, 2024Historically, investors were issued a share certificate, also known as a stock certificate, when they bought shares of a publicly traded company. The share certificate was a receipt for the stock purchase and included essential details about the investor’s stock ownership, such as the number of shares purchased.
You haven’t needed a physical piece of paper to prove ownership for a long time. This information is now all stored electronically. Sometimes, physical share certificates are given as gifts or kept as collectibles, especially if they are from well-known companies or have historical significance. Some smaller, privately held companies might still issue physical share certificates to their investors.
If you lose an old stock certificate or were never given one, you don’t need to worry. There’s a record proving you own a certain number of shares and have all the rights that come with them.
Stock certificates were given on paper long before the rise of the internet and online brokers. If you bought company shares in recent decades, you likely haven't received a physical share certificate. Instead, the process is managed electronically.
When you buy shares, you generally won't receive any certificate. The broker holds onto it, and it will likely be registered in its name. Usually, securities are held in "street name," meaning you own the shares, but they are registered in the broker's name and held by it on your behalf.
This generally makes stock ownership cheaper, more liquid, and much easier to prove. Your ownership is registered electronically. There's a record that you own the shares, which are stored safely. This includes if you bought the shares in the days when companies issued certificates.
In some cases, however, investors may hold physical share certificates detailing their ownership. Shared certificates can be replaced if lost, stolen, or damaged. To replace the physical certificate, shareholders must contact the company's stock transfer agent. They may also be required to complete an affidavit of loss document.
The corporation's investor relations department should be able to provide a shareholder with information on how to contact the transfer agent. A transfer agent records a company's shareholders, the number of shares an investor owns, the stock certificate numbers, and the contact information for the stock owner.
If you find an old stock certificate, perhaps in a deceased relative's belongings, even though the company may no longer exist, it is still worth looking into, as the company may have been bought by an existing company and is worth a certain amount.
Once the transfer agent is notified of the loss, the agent will place a "stop transfer" on the certificate to prevent others from cashing the certificate in if it is found. The stop transfer is much like the stop payment that an individual might place on a check at their bank. The transfer agent will also notify appropriate parties to alert them that the certificate has been lost.
Each company’s procedures may vary. However, there are some steps that the shareholder must follow. First, the shareholder must describe the loss and any facts surrounding the loss in an affidavit. Second, the shareholder may be required to purchase an indemnity bond. The purpose of the bond is to protect the corporation and the agent in case another party somehow redeems the lost certificate later. (Think of it simply as additional insurance.)
A new certificate will be issued when the necessary information is provided and the necessary steps are taken.
Investors buy and sell shares through a broker who handles everything on your behalf. If you have an online broker account and want to sell some shares, you just have to accept the price, click sell, and wait for the proceeds to be deposited into your account.
There is no fixed fee to replace a lost physical share certificate. If you request one, it’s obviously going to cost the company money to produce and send, and you will have to foot the bill. Unless you want a certificate as a gift or collectors’ item, it may not be worth paying the fee. Having physical possession of a stock certificate isn’t necessary.
If the company is still trading, your first port of call should be to contact the stock certificate's transfer agent. This agent handles keeping records for stockholders and is listed on the certificate. Alternatively, if the company has since merged or been acquired, contact the new company's investor relations department. Your stockbroker may also be able to help.
Old stock certificates can also be collectors' items. They are a piece of history, and people are willing to pay a premium for them. Generally, the older and rarer the certificate is, the more it is probably worth. Do some research online to see how much it could fetch, and consider contacting a professional appraiser.
Contacting the company's investor relations department can remedy a share certificate loss. This department will inform the shareholder how to contact the transfer agent, who can place a stop payment on the shares and reissue a new certificate. The shareholder may have to complete an affidavit and purchase an indemnity bond.
However, stock certificates are no longer needed, and even if an investor loses their certificate, they still own the shares.